How (Not) to Respond to the Economic Crisis

By Andrew Kliman, Author of Reclaiming Marx’s “Capital“: A refutation of the myth of inconsistency.

Working people need to mobilize in order to protect themselves during the economic crisis.  But winning concessions from the government is not a solution to the crisis or pathway to a new boom.  Consider the notion that the crisis is due to an upward redistribution of income that supposedly has depressed demand. This doesn’t hold water, and it’s dangerous as well.

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As people begin to search for an explanation of what has gone wrong and a different way of life, we need to be prepared to meet them halfway with a clear understanding of how capitalism works; of why, when push comes to shove, it cannot work for the benefit of the vast majority; and of what exactly must be changed in order to have a viable and emancipatory socialism. Rather than slogans, they need genuine theories and concepts that provide real understanding.

One thing that’s important for people to understand is that there’s nothing inherently progressive about the new shift away from the “free-market.” Yes, during the New Deal, intervention and regulation were accompanied by some progressive social welfare policies, but that was because a gigantic mobilization of working people forced the U.S. government to make concessions in order to save the capitalist system. If it can save the system without giving such concessions, increased intervention and regulation will be just that–intervention and regulation, period. We have seen that the bailout money isn’t there to make our lives better.

As in the 1930s, working people need to mobilize in order to protect themselves during the crisis as well as they can. By getting their demands met, they will help themselves in the short run.  We should be aware, however, that any concessions they wrest from the government are not a solution to the economic crisis, not a pathway to a new boom.

For instance, there’s a notion floating out there that the crisis is due to an upward redistribution of income that supposedly has depressed demand. Economically, this notion (undeconsumptionism) doesn’t hold water. The rich also spend. And companies spend their profits to construct factories and malls, purchase equipment, and so on. This isn’t consumer demand–it is investment demand–but demand is demand. Even more importantly, capitalism is a profit-driven system, so what is good for capitalism–what’s good for the capitalist system, as distinct from the majority of people living under it, is high profits, not low profits. It needs to be understood that there is no solution to this dilemma within the confines of capitalism system.

I’m not advocating some abstract revolutionism. Yes, during the economic slump, working people will certainly need to struggle for downward redistribution–concessions that protect their incomes and homes and jobs–but it is important not to fall prey to the illusion that this is helping “the economy,” much less a path out of the crisis. Concessions do not restore profitability, but as long as we remain within the confines of the capitalist system, a new boom will require the restoration of profitability. So downward redistribution of income will tend to destabilize the system even further. It is very dangerous to sow illusions that a fairer division of the pie will solve the crisis. What if the pie does get divided more fairly, and the actual effect of this is to reduce profitability further, send the economy into a depression, and trigger renewed panic in the worlds’ financial markets? The stage will have been set for a virulent reaction, perhaps even fascism. Working people need to be prepared to confront that, but they will not be prepared if they’ve been led to believe the trickle-up notion that what’s good for the working class is good for capitalist America.

So working people need to fight like hell for concessions, while at the same time understanding that these concessions will certainly not solve the economic crisis, and that the only real solution that will benefit them is a new socioeconomic system, socialism, in which what’s good for people is what’s good for the economy, rather than the current system in which the interests of people and the interests of “the economy” are antagonistic.

One Comment on “How (Not) to Respond to the Economic Crisis”

1. 1Gerald Keaney said at 4:39 am on May 7th, 2009:Cool, but a couple of things:1. How is government intervention a “shift away from the free-market ?” Think of Soviet intervention: Wanna buy some guns? cars? vodka? We’ll even throw in some blonds. Governments are always corporate.2. May be a bit less controversially, class struggle for wages will move the economy away from reliance on “fictitious capital,” and so could save the market from a bit of toxic waste the short term. Marx reckons you force economic change as better-paid workers increase the demand for better food and clothing etc, and the economy has to restructure to meet the need. Successful wage struggle means increasing worker control of the economy, and in the shorter term saner economics. (In the longer term hopefully it means real communism).