Recession: capitalism does not work
The figures of the economists and politicians are now revealing what millions of workers and farmers have known for a long time — Australia's economy is in recession. Approximately every ten years the economy takes a downturn. Living standards go down, the government talks about belt-tightening, services and welfare payments are cut. Workers are thrown out of their jobs, and employers proclaim that they cannot afford any wage increases, effectively cutting wages by intimidating remaining employees to work overtime without any payment. Companies go into receivership, thieving the workers' entitlements. It is a crisis of overproduction that are inevitable in a capitalist society. Workers produce too many commodities that cannot be sold. Shops bulge with products but workers do not have the money to buy them. Investment stops as unsold goods pile up. This is the madness and criminality of the capitalist system. A main factor that has reduced the ability of workers to buy is the GST. It has forced prices up considerably, and the tax cuts did not compensate. The example of the housing industry makes the point. Homebuilding has slumped, even though new houses are needed. It is because the GST has pushed up the price of building houses and potential buyers have given up. The prices of many other commodities have also risen. The GST is not imposed on fruit and vegetables but prices have risen substantially. The price of bread has gone up by at least 10 per cent. The periodical crises of overproduction are a direct result of the exploitation of the working people. Only a fraction of the values that workers create are passed on to them in the form of wages. The rest goes as profits to shareholders and the purchase of new equipment intended to reduce the number of workers employed still more and further increase profits. Telstra is an example — it has just declared a record profit of $2.6 billion for the half year to December 2000. When delivering the Telstra report last year, Managing Director, Dr Switkowski gave emphasis to his plans to sack 10,000 workers. This year he confirmed that Telstra was on target in reducing its head count. At the same time, millions of dollars will be paid out to shareholders who do no work in Telstra whatever. They produce nothing and provide no service. Overall, the economy is unplanned. No manufacturer knows what will be needed in one year's time. But, when too much has been produced they sack workers. This boom and bust cycle has continued during the whole existence of capitalism. Just so long as there is private ownership of the means of production and of the commodities produced while, on the other hand, the masses of workers own little or nothing, the cycle will continue. From recession to depression? This time, the recession could slide into a full-scale depression. The economies of the major capitalist countries are all running into severe difficulties. The economy of Japan is described as nearing "collapse". In an attempt to get the Japanese economy going again, interest rates have been reduced to only 0.15 per cent and the Japanese government has dished out huge tax cuts. But these measures are not working because they don't affect the real reasons for the problems facing the Japanese economy. The American economy is slowing considerably, as are the economies of the industrialised European countries. The prices of commodities such as iron ore, coal, natural gas, tin, gold and other resources are low, and these are among Australia's main trading items. Despite the attempts of Howard and Costello to "talk up" the economy, the reality is to be seen in the slump in the exchange rate of the Australian dollar. Few wish to buy it, and this would not be the case if the economy were strong. The slump in the dollar exchange rate may bring some benefits to those capitalists who have commodities to export, but it makes the cost of imports into Australia that much dearer. The cost of importing cars, aeroplanes and computers, very few of which are manufactured here, continually blow out our trade deficit. Another commodity affected is oil. Even though Australia is self-sufficient in oil production, the price of oil is determined by the US dollar price and not by local production costs. The price will increase as the exchange rate of the Australian dollar falls. Furthermore, Australia's oil resources are largely owned by overseas transnational companies. The politicians and economists are not telling the truth about the economy. Costello claims that there is only a slump in the building industry. Howard has blamed the deepening crisis on the fact that the Reserve Bank put interest rates up too high last year. Well-known economist Ross Gittins (SMH 8/3/01) tells us that one reason is that people were saving rather than spending last July's income tax cut. He says that people should start spending their tax cuts as soon as they like! He also suggests that it is all in the mind saying that the more the nation focuses on the question [of recession], the more likely it is to come about. All these explanations are merely excuses that deal with the results, not the causes. They are aimed to obscure the real reasons and hide them from the people. It is the private enterprise system itself that is the real cause — the exploitation of all who work. The sackings, long hours and inadequate wages, working overtime for no pay, thieving the entitlements, cutbacks on safety, and the introduction of new technology are all examples of how exploitation occurs. They all have the deliberate purpose of reducing the number of workers involved. Another cause is the planlessness of the capitalist system. The aim is to produce commodities and to sell them at a profit — the maximum profit. But as long as no single producer knows the market, and whether what is produced will be sold, the individual capitalist is a blind player. They are playing with the lives and jobs of the workers, who are thrown out of employment just as soon as they can be no longer exploited at a profit. The only way out of this vicious system is the socialist alternative — the far-reaching extension of public ownership of the means of production, the introduction of economic planning, a completely restructured tax system. We must throw out of government those political parties that cling to a system that brings so much misery, injustice, insecurity and hopelessness. Join us in helping to bring this rotten and rotting system to an end.