An Unemployment Story: Capitalism Won’t Solve Economic Crisis It Created

Economic crises are deadly for workers. But for capitalists, crises are opportunities to attack the working class. As Treasury Secretary Andrew Mellon declared at the onset of the Great Depression, “During depressions, assets return to their rightful owners.” By “rightful owners,” he meant the capitalist ruling class. (Mellon himself was a financier who amassed a personal fortune of more than $300 million.) The system’s internal contradictions create periodic busts that weed out weaker capitalists and enable the surviving bosses to increase their profits by rolling back workers’ gains.
The current Great Recession is no exception. The capitalist class has used it to wage a relentless class war, complete with massive unemployment and givebacks from workers still hanging on to their jobs. This brutal cycle can be ended only when workers fight back — not just against pay cuts, but to destroy capitalism itself.
A Worker Faces the Crisis
In 2008, when Michael was laid off from his construction job, he was just one of millions of workers who found themselves jobless due to the latest capitalist crisis. What he didn’t know was how deeply this crisis would cut. In his home Washington State, there were now 350,000 workers collecting monthly unemployment checks. In Seattle, where Michael worked, there were three unemployed workers for every job opening.    
After spending nearly two years on unemployment, applying for hundreds of jobs, Michael finally found work in a factory. Though the job was similar to his old one, he was forced to take a 30 percent cut in pay; his wages fell from $16.75 to $12 an hour. He was not alone. The average worker coming off unemployment during this crisis took a 17.5% pay cut, with the deepest cuts concentrated among the lowest-paid workers.
Where did all these lost wages go? They were pocketed by the capitalists. In 2010, 93 percent of all income gains in the economy went to the top 1 percent of the population — what economist Joseph Stiglitz called “the largest redistribution of wealth in such a short period of time in history.” In fact, this class thievery merely accelerated a trend of the last four decades. In 2000, U.S. workers received 64 percent of national income; by 2012, their share dropped to 58 percent. In short, the capitalist class has grown even wealthier at the expense of the working class.
Class War by Design
The civil rights and anti-Vietnam War movements of the ‘60s and early ‘70s fought militantly to empower the working class. Rejecting the ballot box, workers, students, and soldiers took to the streets to demand justice. Mass urban rebellions helped to crush the capitalists’ ability to wage genocide in Vietnam. As a result, wages and benefits between 1966 and 1972 rose at a record 6.8 percent per year. In 1966, official unemployment hit an all-time low of 3.8 percent. In 1969, the average duration of unemployment fell to a record low of 7-8 weeks.
This period was a nightmare for the capitalist class, squeezed between rising inter-imperialist rivalries abroad and revitalized working-class movements at home. In 1971, in a secret memo to the U.S. Chamber of Commerce, future Supreme Court Justice Lewis Powell warned that the Left was “waging ideological warfare against the free enterprise system” and that “almost half of college students favored socialization of basic U.S. industries.” He stated that capitalists needed to stop their policy of “appeasement” of the working class: “The time has come — indeed, it is long overdue — for the wisdom, ingenuity, and resources of American business to be marshaled against those who would destroy it.”
In a 1976 report by the Rockefeller-organized Trilateral Commission, ruling-class stooge Samuel Huntington echoed Powell’s concerns. He stated that the U.S. suffered from an “excess of democracy” and that “people no longer felt the same obligation to obey those whom they had previously considered superior to themselves in age, rank, status, expertise, character, or talents.” Two years later, another Trilateral Commission member, William Simon, warned that the U.S. is “careening with frightening speed toward collectivism.”
The rulers’ solution was to launch a massive attack on workers. In the early 1980s, as head of the Federal Reserve, Paul Volcker jacked up the prime interest rate to induce a recession. This caused unemployment to skyrocket amid a relentless attack on labor unions, spearheaded by Ronald Reagan’s firing of 11,000 air traffic controllers in 1981. In 1982, at the height of the Volcker recession, 60 percent of unions agreed to pay freezes or cuts.
Hand in hand with their economic attack, the capitalists launched a political assault on workers. They packed their think tanks and universities with intellectuals dedicated to neo-liberalism, a reactionary ideology that stressed total reliance on the market and the elimination of social programs run by the government. Think tanks and foundations, Simon stated, must “serve explicitly as intellectual refuges for the non-egalitarian scholars and writers” — those who would exalt the deeds of capitalists while relentlessly attacking workers.
Soon enough, the dramatic reversal of U.S. class struggle was apparent. In 1993, the Wall Street Journal reported that industry had “excelled in holding down the cost of labor. Hourly pay in the U.S. was lower than in most other [industrial nations],” to the point where “gaps have narrowed” between the U.S. and “emerging nations” like Mexico and Taiwan. The Journal lauded this trend as “a welcome development of transcendent importance.”
In Congressional testimony in 1997, Federal Reserve Chairman Alan Greenspan explained that resurgent capitalist profits were the result of “atypical restraint on compensation increases” and “mainly the consequence of greater worker insecurity.” In 1991, as he pointed out, 25 percent of workers feared being laid off. By 1996, that number rose to 46 percent. In explaining how Ford “tamed the monster,” namely the United Auto Workers, the Wall Street Journal gleefully reported how “massive layoffs” and “outsourcing” had forced “increased cooperation” among workers now willing to work harder for less.
Worker Misery is No Accident
Michael is part of a growing trend. Between 1972 and 2011, as worker productivity increased by 80 percent, wages have gone up only 4 percent. More recently, workers have actually lost ground to the price inflation on necessities. Since 2000, food prices have risen 25.2 percent, health insurance premiums 131 percent, and the price of gas 286 percent. With public transit allowed to deteriorate under neo-liberalism, Michael and millions of others spend an increasing proportion of their paychecks on gas as “extreme commuters,” traveling 40 miles or more to their jobs.
Yet Michael is not the hardest hit in this economic crisis. The bosses have used racism in their effort to make even more profit and also to divide the working class. They’ve created categories of super-exploited workers. As racist anti-immigrant hysteria is stoked by the media and politicians, the bosses have taken greater liberties in exploiting Latino workers through overwork and stolen wages. Black workers are still “last hired, first fired.” A recent study found that a black male with a college degree had as great a chance of being called back for an interview as a white male with a felony conviction.
The Only Solution is Revolution
More than anything, what Michael and other workers across the world need is class consciousness. The capitalist class is organized in its attack on the working class; workers must be organized in their counterattack. They must organize under the only political banner that has consistently fought for the rights and dignity of the working class: communism. There is a reason why the capitalists’ lackeys label those who opposed slavery, racist segregation, apartheid, sexism, child labor, and imperialist war as communists. It is because communists fight for workers. Communism is the political movement of the working class.